Do you wish to apply for a credit card? Most people applying for credit cards are often concerned about their credit limits. However, the most vital consideration should be the type of credit card you acquire.
The extract below discusses the various credit card types.
1. Standard Credit Cards
These credit cards are easy to operate. Once you apply for the card, the lender gives you a specific credit limit. You must make monthly repayments on your current debt once you begin using the card.
Standard credit cards are unsecured and do not have reward programs. Some lenders will give you the freedom to choose between two low-interest credit card types.
One has a low or zero interest rate for the first few months after which you begin paying a higher interest rate. The other has a fixed low-interest rate.
2. Reward Credit Cards
Different lenders have varying rewards. For example, some may provide cash rewards while others give points which can be redeemed for household items at major stores. Others give rewards in terms of travel and hotel discounts.
Read the company’s terms and conditions before applying for the reward credit cards. Choose a company with reasonable interest rates and a low annual fee.
3. Bad Credit Credit Cards
These cards assist people with a poor credit history to restore their credit rating. Most of these cards are secured, meaning you need collateral to obtain the credit card. Typically, the collateral should be of greater value than the amount credited to the card.
Users that make timely payments increase their credit limit and their credit cards upgraded to standard credit cards.
4. Balance Transfer Credit Cards
Balance transfer refers to moving debt on your current credit card to a new credit card. Balance transfer credit cards have low or zero interest rates for the first few months, which means that you will repay your debt without having to worry about interest. However, most cards will charge a balance transfer fee of between 3-5%.
Other than low-interest rates, balance transfer cards may have cash reward programs and a low annual fee. Make your monthly payments in time to avoid penalties or a poor credit rating.
5. Subprime Credit Cards
These credit cards are reserved for people with a poor credit history. Although they are easy to apply, they have high-interest rates, low credit limits, and harsh penalties. People with subprime credit cards are required to make monthly payments on time to avoid high-interest rates and to improve their credit rating.
6. Travel Credit Cards
These are popular among people that travel frequently. Every time you use the card, you get points which you can redeem for an air ticket or get discounts when booking a hotel.
Points for specific cards are restricted to particular airlines while those for generic cards can be redeemed with any airline.
Choosing Credit Card Types; Be in the Know!
When choosing credit card types, shop around to know the cards with low-interest rates, annual fees, and reasonable penalties. Do not forget the golden rule of credit cards; pay back in time.
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